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It
is well known that the small farmers do not have the economic strength to
retain the produce with themselves till the market prices are favourable. There
has been a felt need in the country to provide the farming community with
facilities for scientific storage so that wastage and produce deterioration are
avoided and also to enable it to meet its credit requirement without being
compelled to sell the produce at a time when the prices are low. A network of
rural godowns will enable small farmers to enhance their holding capacity in
order to sell their produce at remunerative prices and avoid distress sales.
Accordingly, Gramin Bhandaran Yojana, a capital investment subsidy scheme for
construction/renovation of rural godowns was introduced in 2001-2002.

The
main objectives of the scheme include creation of scientific storage capacity
with allied facilities in rural areas to meet the requirements of farmers for
storing farm produce, processed farm produce and agricultural inputs; promotion
of grading, standardization and quality control of agricultural produce to
improve their marketability; prevention of distress sale immediately after
harvest by providing the facility of pledge financing and marketing credit;
strengthen agricultural marketing infrastructure in the country by paving the
way for the introduction of a national system of warehouse receipts in respect
of agricultural commodities stored in such godowns and to reverse the declining
trend of investment in agriculture sector by encouraging private and
cooperative sectors to invest in the creation of storage infrastructure in the
country.

The
project for construction of rural godowns can be taken up by individuals,
farmers, groups of farmers/ growers, firms, non-Government organizations
(NGOs), Self Help Groups(SHGs), companies, corporations, co-operatives,
federations and agricultural produce marketing committees in the country.

Location

Under
the scheme, the entrepreneur will be free to construct godown at any place, as
per his/her commercial judgment except that it should be outside the limits of
Municipal Corporation area. Rural godowns constructed in the food parks
promoted by the Ministry of Food Processing Industries shall also be eligible
under the scheme for assistance.

Size

Capacity
of a godown shall be decided by an entrepreneur. However, Subsidy under the
scheme shall be restricted to a capacity of minimum 100 tonnes and maximum 30,000
tonnes. Rural godowns of smaller size upto 50tonnes capacity will also be
eligible for subsidy under the scheme as a special case based on viability
analysis. In hilly areas, rural godowns of smaller size upto 25 tonnes capacity
will also be eligible for subsidy.

Conditions for Scientific Storage

Godowns
built under the scheme shall be structurally sound on account of engineering considerations
and functionally suitable to store the agricultural produce. The entrepreneur
may obtain a licence to operate the godown, if required by the State Government
concerned, under the State Warehousing Act or any other relevant laws. The
rural godowns of 1,000 tonnes capacity and more should get accreditation from
Central Warehousing Cooperation (CWC).

Credit Linked Assistance

Subsidy
under the scheme is linked to institutional credit and will be available to
only such projects as are financed by commercial banks, Regional Rural Banks,
state cooperative banks (SCBs), State Co-operative Agricultural and Rural
Development Bank (SCARDBs), Agricultural Development Finance Companies (ADFCs),
North Eastern Development Finance Corporation (NEDFI), Urban Cooperative Banks
etc. Loan to the entrepreneurs
from banks for the construction of godowns would carry an adequate long-term repayment
period.

Assistance
under the scheme shall be available on capital cost of construction of godown
including the cost of allied facilities like boundary wall, internal road,
platform, internal drainage system, weighing, grading, packaging, quality certification,
warehousing facilities which are functionally required to operate the godown.

Pledge Loan Facility

The
farmers keeping their produce in the godown shall be eligible to avail pledge
loan on hypothecation of their produce. The terms and conditions governing
pledge loans, rate of interest, period of pledge, amount etc. will be as per
the guidelines issued by RBI/NABARD and as per normal banking practices
followed by the financial institutions.

Subsidy

Rate
of subsidy shall be:-

(a)
33.33% of the capital cost of the project for SC/ST entrepreneurs and their cooperatives
and in case of projects located in North - Eastern States, hilly areas subject
to a maximum ceiling on subsidy of Rs.3.00crores.

(b)
25% of the capital cost of the project to all categories of farmers, agriculture
graduates and cooperatives subject to a maximum ceiling on subsidy of Rs.2.25
crores.

(c)
15% of the capital cost of the project to all other categories of individuals,
companies & corporations etc., subject to a maximum ceiling on subsidy of
Rs.1.35 crores.

(d)
25% of the capital cost of the project for renovation of godowns of cooperatives
with assistance from NCDC.

Capital
cost of the project for the purpose of subsidy under the scheme shall be
calculated as follows:

a)
For godowns up to 1000 tonnes capacity - project cost as appraised by financing
bank or actual cost or Rs.3500/- per tonne of storage capacity, whichever is
lower;

Subsidy
shall be released through NABARD for projects financed by commercial,
cooperative banks andRRBs. It will be kept in the Subsidy Reserve Fund Account
of the financing bank and shall be tax free.

By : M.V.S. Prasad :The author is Joint
Director, PIB, Chennai With inputs from the Ministry of Agriculture.